The European Single Market – How to move forward? Free Market Road Show 2024

On 30 April 2024 - almost exactly one year later - INESS, in cooperation with the Austrian Economics Center, organised the popular Free Market Road Show - and again on a highly topical subject. This year marks not only the 20th anniversary of Slovakia's EU membership, but also our 20 years in the European Single Market, which recently celebrated its 30th birthday.

The European Single Market – How to move forward? Free Market Road Show 2024

As INESS Director Richard Ďurana said in his opening speech: 

"...the European Single Market is the most economically important part of our EU membership. It represents the access of Slovak entrepreneurs to the duty-free single market and we already know today that the economic benefits of the single market are many times higher than the volume of EU funds received. Thanks to free trade, the long-term level of GDP is 15-19% higher than it would have been if Slovakia had stood outside the free market. The value of the net contribution from EU funds is just over 1% of Slovak GDP. This is due to the fact that Slovakia is an open economy with large exports and imports, 80% of which end or originate in the European Union.

However, does it work well in the European sea of regulation, or is there room for improvement? Is Europe a space that induces new innovations and technologies? How do we compare with other large markets that are in direct competition with Europe in the global space? What is the position of Slovak producers with the ambition to expand beyond Slovakia's borders?"

These questions were the main themes of the conference entitled European Single Market - How to move forward? as this is a topic that defines the near future of the European Union and its economic performance.

After 17 years of organizing the Free Market Road Show, this year's edition was different than all previous ones - it was purely Slovak without the participation of foreign guests. Nevertheless, we once again welcomed top domestic speakers - representatives of the business sector, the Ministry of Economy of Slovak Republic, the European Parliament and the European Commission, as well as nearly 80 guests. The hall of Pálffy Palace in Bratislava was filled with politicians, experts, as well as students.

In the following text we present the main ideas that were expressed in the contributions of the individual panellists.

 

Panel I: What prevents Slovak companies from doing more business in Europe?

Marián Jánoš (CEO, Dr. Max Slovakia):

  • We are in an environment that is regulated. That is fine, as we are in an environment where people's health is at stake. What is different from abroad is the prohibition of corporate-owned chains (Slovak legislation does not allow one owner to own 2 or more pharmacies). We have 409 pharmacies, each of which must be a separate Ltd.
  • When we need to transfer - for example, for a momentary help - one employee from one establishment to another, even within one shopping centre, we have to create a new employment contract for the employee each time.
  • We hope that we will be able to simplify and harmonise this legislation at some point in the near future.
  • Increasingly, we are also offering services other than the sale of medicines in our pharmacies (CRP, haemoglobin measurement, etc., and we are also interested in allowing vaccinations in pharmacies - in the USA, vaccinations against 13 diseases have been given in pharmacies for more than 30 years).
  • We hope that by the 2025 flu season we will be able to vaccinate people against flu in pharmacies.
  • The positive news is that Slovakia is a European pioneer in e-prescribing.

Mário Lelovský (Vice President, National Union of Employers):

  • If someone feels it's bad now, they have no idea what it was like before. In the 1990s and early 2000s (before EU entry), traders stood for long hours at customs to enter the country, paying customs duties and sales tax (the equivalent of VAT, which was not deductible).
  • The environment for doing business was complicated and chaotic.
  • Companies also developed a very strong Brussels influence. They had to.
  • The situation improved for a while, but then the "error" crept in - bureaucrats and overwhelming bureaucracy and regulations. We have entrusted too much power to officials in Brussels and in Slovakia. The European economy is losing ground.
  • The European Commission should consult companies, think tanks, trade unions and employers when shaping regulations.
  • Business Europe, of which the National Union of Employers is a member, has issued a publication with recommendations for the EC. While foreign direct investment fell by 69% in the EU, it rose by 63% in the US. The rich people of this world are investing in the US, not in Europe.

Juraj Hrbatý (CEO, Finax) in his contribution stated:

  • The EU has pushed for the single market in 2019. We have won tens of thousands of new customers in several EU countries.
  • SOLVIT - we turn to them when we have problems.
  • Some countries grant tax benefits for investment projects, others don't. 
  • The EU is exactly the kind of market where the stock exchange absolutely does not work.

Ján Šebo (Institute for Strategy and Analysis, Government Office of the Slovak Republic):

  • I have been working on regulation from a consumer perspective. At the moment, we are preventing consumers from having a level playing field. In other words, consumers are being restricted.
  • I want politicians to give me Estonian taxes and Swedish services, but so far we only have Swedish taxes.
  • Within the EU, we are stretching people and companies.
  • I want to keep it simple, I want to keep it in an app, I want to keep it transparent (investing).
  • Become the leaders of that idea and pack the apparatus in the commission where they will help you push it through. If the idea is pure and simple, it can be pushed through.

Radovan Ďurana (INESS analyst) presented the new INESS publication entitled Market Force - Revitalising the Single Market for the next 30 years, which we have prepared with partners from 6 other EU countries. In his contribution he further stated:

  • The founding treaties are written very well, very precisely. But they always get some exceptions in them.
  • State aid is a competition between states to bribe investors.
  • Member States do not implement all the legislation as they should if they introduce their own regulations.
  • If you look at the Czech Republic and Slovakia, a country of 15 million produces 50% more cars than France, a country of 60 million.
  • Trade in services is significantly weaker than trade in goods. The OECD has a Restrictiveness Index, and there you can find how many countries have unnecessary labour market regulations.
  • 7 million people in the EU work in a country other than their country of citizenship. That number is very small for a group that has a population of 440 million.
  • A third of EU citizens' money is in deposit accounts.
  • First we regulate digital markets, and then we expect innovation. But that is not how innovation works.
  • The ESG package - already every company is spending hundreds of thousands a year to meet ESG requirements. 
  • Europeans are the ones buying Chinese products with US software.

After the contributions of the individual speakers, it was time for questions from the guests. For example, when asked about the possibilities of saving for retirement in different EU countries, Ján Šebo (Institute for Strategy and Analysis, Government Office of the Slovak Republic) noted that Eastern European countries in particular have started to make piggy banks out of their pension systems - they will break the piggy bank and take the money out. Responding to a question about information asymmetry on European stock exchanges, Ján Šebo pointed to the existence of a unified system of financial information in the USA, where the consumer can find all the necessary information about the shares of individual companies.

Panel II: How to improve the Single Market?

Panel II of the conference was opened and moderated by INESS analyst Matej Bárta, who noted that although many of the challenges facing the EU are long-standing, issues such as the regulation of digital markets and artificial intelligence are new and the EU needs to respond to them without harming consumers.

Vladimír Šimoňák (State Secretary/Deputy Minister, the Ministry of Economy of Slovak Republic):

  • There is no market in the EU internal market. We are proficient in regulation.
  • Today, there are 426 regulations that the Slovak Trade Inspection monitors.
  • I am missing the point of the GDPR for example, and we are lagging behind the innovative world in digital.
  • The WTO conference was a rather sad experience, from the dysfunctional adjudication of disputes to the abuse of developing country status by Singapore and South Korea. More and more, this organisation is becoming a shadow of its past.
  • I am concerned about the future of the European market unless some of the rules of operation are changed. For example, photovoltaic is no longer being made; we have more expensive cars than China.
  • If we lose the car industry, 14 million jobs are at risk in Germany alone.

Zuzana Gentner Vavrová (European Commission, DG for Internal Market, Industry, Entrepreneurship and SMEs - Public Servant) in her contribution stated:

  • The single market acts as an engine for economic growth. 
  • A fully functioning single mrket is a fundamental necessity for EU competitiveness.
  • Timely and correct transposition and application of legislation is essential.
  • Almost 60% of the obstacles faced by businesses today are the same as 20 years ago.

Eugen Jurzyca (MEP) in his contribution stated:

  • At EU level, we will push for consumers to be able to transfer their savings from Pillar II to Pan-European Personal Pension Product.
  • The key point is that the single market is the pearl of pan-European integration. It is the best thing that integration has brought.
  • Inefficiency and statism are defended through the mouths of their victims. Voters are pushing for much inefficiency.
  • States do not grow because they have low wages, but because reforms have come. And we have stalled those in Slovakia for years.
  • We are frozen, we're losing behind the US and China. There is a way out if we all fight together - politicians, voters and lobbyists.

Miriam Lexmann (MEP) in her contribution stated:

  • Even during the deliberations on the Artificial Intelligence Act I tried to have social networking algorithms classified as high-risk.
  • The struggle to be China-proof was part of my mandate. We managed to prevent an investment deal with China at the cost of me and several colleagues being on the Chinese sanctions list.
  • When China imposed an embargo on Lithuanian products, I advocated that we negotiate this move against European conventions, but I was told that the agenda was full. We now have an anti-invasion law passed, but it has taken 2 and a half years.
  • We have noble aims in banning internal combustion engines, but we cannot undermine the foundations of our economy.
  • 20% of the price of a Chinese car is access to the critical raw materials that China has. 
  • We must push the European Union to focus on what it has and not on what it does not have.
  • We have a problem that the patents of European companies are being stolen by Chinese companies, and we cannot protect these companies from the risks of intellectual property theft. In the US, they have calculated that they are losing USD 600 billion a year because of this; in Europe, we do not even have a count.

Guests were again given the opportunity to ask their questions. In their answers, the panelists stated: 

  • It is hard to talk about free markets in dictatorships. In China, the Communist Party runs the economy. In upholding these principles, our protection must also be kept in mind (Miriam Lexmann)
  • By preventing imports from abroad, we may be helping our producers, but we are harming consumers. The loss to consumers is greater (Eugen Jurzyca
  • Subsidised products from abroad are a gift from foreigners to our consumers. It would help Africa the most if we opened our markets to them (Eugen Jurzyca)
  • We are distorting our relations with Africa in particular with these restrictions (Vladimír Šimoňák
  • This is not a naive or defenceless position, it is an assertive position that the EU has taken (Gentner Vavrová)
  • Whole countries, not just individuals, sometimes rest on their laurels. America has twice as many skilled immigrants as Europe. Skilled migrants go to the US, not here to the EU (Eugen Jurzyca)
  • There is a phenomenon that if something is going well, it is thanks to domestic politicians, and if something is not going well, it is the EU's fault. In national elections we elect politicians who shape European policies (Miriam Lexmann
  • The number of donated companies serves as a criterion for the success of EU subsidy projects. Billions in subsidies distort the market (Eugen Jurzyca)
  • A real EU free market is possible, but we don't know if the political will will be there (Vladimír Šimoňák

The conference was closed by Richard Ďurana, who noted that he was pleased that we had managed to bring together so many great speakers in one place at one time, as well as the consensus of guests and speakers on the benefits of the single market. He reiterated that the single market is important and should be a priority.

Thank you once again to all the guests for your participation and contributions to the debate, as well as for the pleasant mood you made the conference feel. We look forward to seeing you on the next occasion!

The conference was supported by the EPH Foundation, the National Union of Employers, Happy Day Catering, Austrian Economics Center, EPICENTER (the European Policy Information Center) and the media partner was Aktuality.sk. We would like to thank all partners for their support!

INESS is an independent, non-governmental and non-political civic association. All of our activities are financed by grants, 2% tax allocation, own activities and donations from individuals and legal entities. Thus, our operation, scope and quality of outputs, largely depends on your generosity.
Our
awards
Zlatý klinec Nadácia Orange Templeton Freedom Award Dorian & Antony Fisher Venture Grants Golden Umbrella Think Tanks Awards